Author: SondraHunter

The price of an ounce of gold continues to hang around the $1650 mark on Wednesday as investors and traders continued to mull over India’s proposal to lift gold import duties to 4 percent, which has recently weighed on gold futures, along with a strong US dollar.

Latest Gold Price

The most actively traded gold contract, for April delivery, fell $20.30, or 1.2 percent, to settle Tuesday at $1,647.00 an ounce on the Comex division of the NYMEX.

Gold Import Duties for India

Jewellers in Mumbai and other parts of India are on a three day strike to protest the Indian government’s hike in customs duties and a consumer tax on gold imports.

Some 700 jewelers in Rajkot, Gujarat, 3000 jewelers in Ahmedabad and Surat and more than 1200 jewelers in Mumbai, from the famous Zaveri Bazar area have also threatened to continue the strike for an extended period, some say indefinitely, if the government does not retrace its duty cuts.

The Indian government has launched more measures to curb the spending on gold consumption in the country by raising customs duty for gold bars and coins, platinum and gold ore in the Union Budget for 2012-13 presented to Parliament last Friday. This is the second time the country has raised taxes on gold imports following dissonance among economists in the country over record purchases that had widened the current account deficit.

Finance Minister Pranab Mukherjee announced the hikes in his Union Budget speech. Customs duty on standard gold has doubled to 4 percent from 2 percent, and the customs duty on non standard gold has also been hiked twofold to 10 percent from 5 percent.

The immediate effect is bound to be severe. Consumption of gold and silver in India is set to significantly drop as a consequence of the country’s decision and hence, world gold prices are taking another hit.

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Price of gold hangs around $1650 mark as traders mull India import duties

US Light oil prices open Tuesday’s trading session hovering near $108 a barrel as tensions in the Middle East continue to boost oil futures while a fall in the value of the US dollar against major currencies on Monday saw the US oil contract close 0.7 percent higher.

Latest WTI Oil Price

US Light crude oil futures for May 2012 delivery was trading at $107.78 a barrel, 07.42 GMT this morning in electronic trading on the NYMEX.

The ICE US Dollar Index fell to a one week low yesterday as traders sold the US currency, triggering automatic sell orders for the pair that further weighed on the US dollar.

The ICE US Dollar Index, which tracks the US dollar against six major world currencies was trading at 79.830 – 07.45 GMT today, from the session open of 79.712.

“Given the dollar’s sharp run up last week, investors are paring back some of those positions. The euro has been able to sustain that $1.30 level and it looks now like there’s more upside momentum after the break of $1.32 on the upside. said Mark McCormick, a currency strategist at Brown Brothers Harriman & Co, New York.

A weaker US dollar adds support to commodities that are priced in the currency, including oil futures.

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US Light oil price trading near $108 as Dollar Index falls against major currencies

The US Dollar Index is holding onto gains racked up last week that saw it return to the 80 level as the euro currency continues to struggle as relief at Greece’s debt restructuring deal gives way to concerns over euro zone growth and risk of debt contagion.

Latest Dollar Index Rate

The ICE US Dollar Index, which tracks the US dollar against six major world currencies was trading at 80.005 – 14.20 GMT today, from the session open of 80.040.

The euro was little changed at $1.3113 as the New York session opened, having earlier dipped to its lowest level since February 16. Stops were cited at $1.3150 with option expiries at $1.3100 likely to sway trade in the near term.

One trader said a close below $1.3080 could prompt some hedge funds to increase short euro positions. Below there further chart support stood around $1.3055, the 50 percent retracement of its January to February rally.

The ICE US Dollar Index rose to 80.132, its highest since January 25, before slipping back slightly.

Greece Debt Restructure

On Friday, Greece took final steps to restructure its debt, using legislation to force remaining private creditors to swap Greek debt for new bonds worth considerably less.

While that paved the way for a fresh bailout for Greece, there was little sign of relief in Spanish and Italian debt markets, where sovereign bond yields rose. All these worries are likely to see the euro ease towards $1.30 and even lower in coming weeks.

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US Dollar Index holding near 80 as euro struggle’s over debt contagion

The commodity sector reversed gains over the past week amid a confluence of reasons ranging from concerns over the downside risks to the global economic recovery to ongoing worries on the sovereign debt crisis in the Eurozone to dissipated hopes on the Fed’s QE3. Most commodities under our coverage fell last week. In the oil complex, the prompt-month contract for WTI crude oil plunged for the first time in 4 weeks, by -2.80%, to settle at 106.7 Friday.

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Weekly Fundamentals – Oil Fell as Investors Worried above Negative Impacts on Recovery

The price of oil has taken a big swing overnight and is volatile to short term corrections as Brent oil futures hit a 43 month high following reports that a Saudi Arabian pipeline exploded, Saudi officials denied the reports, helping prices fall back from their highs in Asia on Friday.

Latest Brent Oil Price

In London, Brent crude oil futures for April 2012 delivery was trading at $125.63 a barrel, 06.15 GMT today on the ICE Futures Exchange.

The European contract closed off yesterday’s trading session at $127.08 a barrel, or a big 3.3 percent higher following the scare.

Brent crude oil prices jumped as high as $5.74 to $128.40 per barrel on Thursday, the highest since July 2008.

“The rise in prices overnight was driven by news that there was a fire in Saudi Arabia but that report has now proven to be false and prices have retreated. The market’s reaction to the news shows that the oil market is really sensitive to supply disruptions.” said Victor Shum, senior principal at Purvin and Gertz global energy consultants, Singapore.

Saudi Pipeline Story

A report in the Iranian media that an explosion had occurred at a pipeline in Saudi Arabia triggered the dramatic surge for oil futures at a time when there has been a steady increase in friction between the US, its allies and Iran.

Two reports in Middle Eastern media said an explosion hit oil pipelines in the city of Awamiyah, in the country’s Eastern province. The reports said the region is a flashpoint for tensions between religious minorities and the established government. One of the reports, in the online magazine Arab Digest, see the article here was accompanied by photographs of what it said was the pipeline fire.

“The sharp move up on the pipeline story points to the market nervousness on anything related to supply problems.” said Gene McGillan of Tradition Energy.

“There’s a substantial risk premium built into this market. The fundamentals do not warrant the price being up this high. The price should be lower. However, it’s not, and there’s some fears out there.” said Peter Donovan, an oil trader and vice president of Vantage Trading.

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Oil prices volatile to correction as Brent hits 43 month high after Saudi explosion scare

Oil prices rallied and traded with great volatility yesterday as driven by strong Chinese PMI data, better-than-expected US jobless claims and escalated tensions over Iran. The front-month contract for WTI crude oil rose above 110 for the first time since May 2011 before ending the day at 108.84, up +1.65%, while the equivalent Brent crude contract jumped to 128.4 before settling at 125.39, +0.19%.

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Oil Rallies on Supply Worries in Middle East

The US Dollar Index is holding frim in trading on Thursday after the Fed Bernanke’s testimony on the monetary policy did not provide an indicator of further quantitative easing in America, boosting the the US dollar and piling more pressure on the dollar denominated oil and gold futures.

Latest Dollar Index Rate

The ICE US Dollar Index, which tracks the US dollar against six major world currencies was trading at 78.975 13.50 GMT today, from the session open of 78.794.

In a testimony before the congress on Wednesday, Bernanke said although the economy is on the mend, conditions have not improved enough for the Fed to scale back support measures.

Bernanke had expressed concerns about the American job market, while indicating the sluggish housing market market as a drag on overall economic activity.

He was still pretty glum on the US economy. He said that the fundamentals behind consumer spending were weak, access to credit remained poor, and that inflation wasn’t likely to be a problem, even with rising oil prices.

Dollar to Keep Rising?

But for now at least, there are several good reasons to hang on to the US dollar. With Europe, Britain and Japan all printing, and the US showing signs of hanging back, the US currency is all the more likely to keep rising.

“Ultimately, the key is how much recovery the US and the euro zone each can achieve. Behind profit taking in the euro overnight are concerns over the outlook of the euro zone.” said Michiyoshi Kato, senior vice president of forex sales at Mizuho Corporate Bank.

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US Dollar Index holding firm near 79 after Fed Bernanke comments